Commercial loan coming up for review or expiry?
Most commercial property loans are set for a few years, not for the life of the property. When the term ends, or at an annual review, the lender looks at the property and at you again. We help you get ready before that conversation, and show you what else is available if the answer is not what you expected.
Best started three to six months before the expiry date on your facility.
What a lender usually re-checks
- The current value of the property
- The leases: who the tenants are and how long they have left
- Whether rent comfortably covers the interest
- Your latest financial statements and tax position
Who this is for
Owners with a commercial facility and a date in front of them.
Your facility expires in the next 12 months and nothing has been confirmed.
The lender has asked for updated financials, a rent roll or a new valuation.
You have been told the pricing, the limit or the conditions will be different.
You have been asked to pay part of it down, or to find another lender.
What can change at a review
None of these mean you have done anything wrong. They follow from how commercial loans are written.
If the new figure is lower, the loan is a larger share of the value than the lender agreed to at the start.
The lender compares net rent with the interest bill. Higher interest or a vacancy can push this below the level in your loan agreement.
A major tenant with a short time left on the lease weighs on the lender’s view, even when rent is being paid today.
Lenders adjust how much they want of a property type or a location. That can change the outcome without anything changing on your side.
What we do
A broker’s job here is preparation and comparison.
The expiry date, the review clauses and the conditions you agreed to.
Loan against value and rent against interest, using your current leases.
Financials, rent roll and lease summary set out the way a credit team reads them.
Staying where you are, or what other bank and non-bank lenders may consider for the same property.
Straight with you
Common questions
What is a commercial loan review?
It is a scheduled check, usually once a year, where the lender asks for updated information and confirms the facility still meets the conditions in your loan agreement. It is separate from the expiry of the loan term, although the same information is requested for both.
What happens when a commercial loan term expires?
The facility has to be renewed, refinanced or repaid. Renewal is a fresh credit decision, so the lender may ask for a new valuation, updated financials and current lease details before it decides.
How early should I start?
Three to six months before expiry is a practical window. It leaves time for a valuation, for gathering financial statements, and for approaching another lender if you need to.
Can I move a commercial loan to another lender?
Often yes, subject to that lender’s assessment of the property, the leases and your financial position. Check your current loan documents for any costs of leaving before you decide.
My rent no longer covers the interest the way it used to. Is that a problem?
It can be, because many commercial loan agreements set a minimum level of interest cover. Lenders differ in how they measure it and what they accept, which is one reason to compare.
Do you charge for the first conversation?
Ask us when you request the call back and we will tell you before any work starts. How a broker is paid on a loan is disclosed to you in writing before you proceed.
Talk it through before the lender does
Leave your number and a time that suits. Have your facility letter and latest rent roll handy if you can.
General information only. It does not take into account your objectives, financial situation or needs, is not a recommendation of any credit product, and is not legal, tax or accounting advice. Any finance is subject to lender assessment and approval. Jack (Muyuan) Si is a Credit Representative (516785) of Buyers Choice Licencing Pty Ltd ACN 626 172 281 (Australian Credit Licence No. 509484).